Dow Hits Record High Amid Shutdown Optimism, Tech Stocks Slide

November 12, 2025 at 07:15 UTC

5 min read

Dow index record high chart with tech stocks declining and defensive sectors rising

Key Points

The Dow Jones Industrial Average closed at a record high of 47,927.96, gaining over 550 points, driven by optimism over a potential end to the longest U.S. government shutdown.
The Senate passed a funding bill to reopen the government, with the House expected to vote soon; President Trump indicated he would sign the bill into law.
Technology stocks, particularly AI-related names like Nvidia and CoreWeave, declined due to profit-taking and concerns over high valuations, with SoftBank selling its entire Nvidia stake.
Investors rotated funds from high-valuation tech stocks into defensive sectors such as healthcare, energy, and consumer staples, boosting companies like Merck, Amgen, and Johnson & Johnson.

Market Rally Fueled by Government Shutdown Resolution Hopes

U.S. stock markets experienced a notable divergence on Tuesday, November 11, 2025, as the Dow Jones Industrial Average surged to a new all-time closing high of 47,927.96, up 559 points or 1.18%. This rally was largely fueled by growing optimism that the 41-day government shutdown, the longest in U.S. history, would soon end. The Senate passed a temporary continuing resolution (CR) late Monday to fund the government, which was then sent to the House of Representatives for a vote expected as early as Wednesday afternoon. House Speaker Johnson expressed confidence that the bill would pass quickly, and President Trump stated he would sign it into law. The potential resolution of the shutdown is anticipated to restore the release of key economic data that had been delayed, providing investors with better insight into the economy and interest rate outlook. Historically, the S&P 500 has averaged a 2.7% gain in the month following government reopenings since 1981, adding to the positive sentiment. The Dow's rally was broad-based, with 26 of its 30 components closing higher, including significant gains in healthcare and industrial sectors.

Tech Sector Faces Profit-Taking and Valuation Concerns

In contrast to the Dow's strong performance, the tech-heavy Nasdaq Composite declined by approximately 0.25%, reflecting investor caution amid concerns over elevated valuations in AI-related stocks. The Nasdaq's pullback followed a strong rally on Monday, which had been driven by enthusiasm for technology and AI companies. Notably, Nvidia, a leading AI chipmaker, saw its shares fall nearly 3% after Japanese investment firm SoftBank Group disclosed it had sold its entire $5.8 billion stake in the company. SoftBank clarified that it remains committed to AI investments, intending to use the proceeds to fund its stake in OpenAI. CoreWeave, an AI cloud infrastructure provider backed by Nvidia, also experienced a sharp decline of over 16% after lowering its annual revenue forecast due to delays at a data center partner. These developments contributed to a broader sell-off in semiconductor stocks, with companies such as Micron Technology, Lam Research, and ARM Holdings also posting losses. The Technology Select Sector SPDR Fund (XLK) dropped nearly 1%, underscoring the sector-wide pressure. Market strategists noted that the S&P 500's tech weighting, currently at 36%, has been a key driver of the market but is trading at a significant premium to its 20-year average price-to-earnings ratio, prompting some investors to take profits.

Rotation into Defensive and Value-Oriented Stocks

As investors reduced exposure to high-flying technology and AI stocks, capital flowed into more defensive and value-oriented sectors, particularly healthcare, energy, and consumer staples. Healthcare giants such as Merck, Amgen, Johnson & Johnson, and Viatris saw substantial buying interest, contributing to gains in the Dow. Merck's shares rose over 4% following a quarterly report that beat revenue and earnings expectations despite some softness in full-year guidance. Viatris jumped more than 10% after presenting strategic growth initiatives and projecting operational revenue growth. Other healthcare companies like Moderna, Pfizer, and Elevance Health also posted gains, supported by positive earnings reports and strategic developments. Energy stocks benefited from sector rotation as well, with companies like Exxon Mobil advancing due to strong production and expansion in low-carbon projects. The rotation reflects investor preference for companies with stable cash flows and lower valuation risk amid uncertainty in the tech sector.

Economic Data and Federal Reserve Outlook

The market's cautious optimism is tempered by recent economic data and the Federal Reserve's policy outlook. A weaker-than-expected ADP employment report showed that U.S. private payrolls declined by an average of 11,250 jobs per week over the four weeks ending October 25, signaling a cooling labor market. This data, combined with the government shutdown delaying other key economic releases, has increased uncertainty about the economy's strength. Investors are closely watching speeches from Federal Reserve officials, including Stephen Miran and Christopher Waller, who is reportedly a candidate to become the Fed's next chair. Market consensus anticipates a quarter-point rate cut at the Fed's December meeting, with a 67% probability priced in. The resolution of the government shutdown is expected to restore the flow of economic data, which will be critical for assessing the Fed's future policy moves. Meanwhile, corporate earnings season is winding down, with 82% of S&P 500 companies having beaten forecasts, marking the best quarter since 2021 with earnings growth of 14.6% year-over-year.

Key Takeaways

The Dow's record close reflects investor optimism that the U.S. government shutdown will end imminently, reducing economic uncertainty.
Profit-taking and valuation concerns have pressured AI and semiconductor stocks, highlighted by SoftBank's sale of its Nvidia stake and CoreWeave's lowered guidance.
Investors are reallocating capital into defensive sectors such as healthcare and energy, favoring companies with stable earnings and lower risk profiles.
Upcoming economic data releases and Federal Reserve communications will be pivotal in shaping market direction amid ongoing labor market softness and policy expectations.